(Kitco News) - Numismatic coin collecting always appeals to a certain segment of the precious metals industry, but some dealers say the drop in gold prices earlier this year sparked greater interest in the hobby.

Gold prices fell $200 an ounce in April and then fell further again in June, but has since rebounded to the $1,360 region. That’s still a far cry from the nominal record high of $1,921 reached September 2011.

That fall in price revived interest in coin collecting, said some dealers at the American Numismatic Association’s World’s Fair of Money held this week in suburban Chicago. The show continues through Saturday.

“The interest in collecting has risen. It’s a direct result of the pullback in the (gold) market. Even though there’s no correlation, the perception is there,” said Paul Montgomery, executive vice president, purchasing and sales at APMEX.

Buying interest has stepped up, but sellers aren’t necessarily accommodating them. “The drop in the precious metals market has made it a challenge for some coin collectors to sell. Because of the pullback (in gold prices), this is a buyer’s market. (But) we’re seeing a bit of the supply and demand go out of whack and premiums rising,” he said.

Michael Fuljenz, president, Universal Coin & Bullion, said some of the demand is coming from people willing to loosen their purse strings a little bit, too.

“We’ve seen a lot of pickup in business, especially in coins. People with discretionary money are spending again on their hobbies. From the 2008 recession until about 2011, we hardly saw anything,” he said.

He noticed a little less interest from straight bullion investment purchasers who are just interested in bullion. However, the collector and the person who straddles between numismatic collecting and bullion investing is buying.

“The pure collector and the collector/investor is buying and that’s about 80%” of the market, Fuljenz said.

The ANA’s show is one of the top global coin shows, Montgomery said. More than 1,000 coin and paper money dealers are buying, selling and appraising items, from coins worth a few cents to those over $1 million. Also on display is the Chicago debut of the new $100 bill, which goes into circulation in October.

It’s harder to get quality coins and rarer coins, Fuljenz said. There are a few reasons for that. One is the increase in hobbyists returning to add to their collections, so that is driving up demand.

Another reason is that many coin dealers aren’t stocking the inventory they used to carry. Part of that is that banks aren’t loaning as much money to businesses, Fuljenz said.

“Bank loans are tighter now. It’s not just houses. If you were a dealer who used to have an inventory of $10 million, you might now have $7 million…. So when the market heats up, there’s less inventory around,” he said.

A third reason is wealthier investors are entering the market, seeking alternative investments, whether it’s rare coins, artwork or something similar, he said.

“The big money is spending like they haven’t in the past five years. Coins that are in the $5,000 to $10,000 range are scarce,” Fuljenz said.

He gave an example of gold coins from the Carson City, Nev., mint, which operated from roughly 1870 to 1893, are harder to find. “I see one $20 Carson City coin a year when I used to see three or four,” he said.

“It’s tough to buy nice coins in the $10,000 to $100,000 range…. People who have nice quality aren’t selling. (Those pieces are) in strong hands. Those who have not very nice quality or just OK, they’re the ones selling,” Minshull said.

Montgomery agreed that people with deeper pockets are showing interest in numismatic coins, and bullion to an extent. The tangibility of hard assets remains a lure to investors.

“There’s still not the interest in the financial world, real estate is not what it was, the stock market is still scary to a lot of people, but gold is very real,” he said.

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